Visualising The Impact Of Silicon Valley CEOs

Dan Rogers
•
19-09-2015

Yahoo paid Marissa Mayer $42m in 2014. Microsoft paid Satya Nadella $84m, almost 3000 times the US median pay of $27,000. But are they worth it?

The importance of good management – or the “CEO Effect” – has rapidly increased over the last 50 years. Prior to the 1990s predicting company performance was fairly straightforward; it was largely influenced by the overall economy, and the market trends of a particular industry. Since the explosion of globalisation and technology, this has all changed. Many US companies have been booming even during the recession. Others leverage technology to extreme effect, running the equivalent of one of the largest Telcos in the world with 50 engineers.

What sets these companies apart? The people. Whether it’s great employees, great management, or usually, both; the companies that win are the ones who have the people who can use tomorrow’s technology and open markets to their benefit. This belief in people is why we founded Peakon, and our one of the core uses of our technology is to track and improve management performance. Therefore we thought it would be interesting to look at the performance of Silicon Valley (+ Seattle) CEOs.

Although it’s by no means perfect, the easiest way to track the performance of a public company is it’s share price. However, it’s not ideal to just track the price change directly, because if the market went up 50% whilst the Facebook share price only went up 10%, it’s underperformed. So we took the share prices from the start of the CEO’s tenure (or from IPO for Facebook and Twitter) and benchmarked them to the NASDAQ (at the appropriate point in time). One caveat to this is that it underestimates the price movement of larger companies, e.g. Apple and Google, because they make up such a large part of the index.

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